Controversial tax plans before finance ministers

European Union finance ministers, meeting in Brussels today (11 March), will be asked to approve a controversial proposal that would increase the amount of information shared by national tax authorities.

Although EU leaders in December called for an agreement by March, Luxembourg’s finance minister is expected to exercise his veto, as might the Austrian finance minister. The two countries have blocked the proposal since 2009, insisting that the EU must first conclude agreements containing similar provisions with non-EU countries such as Andorra or Switzerland.

The Commission on Tuesday (4 March) wrote to member states detailing progress in the negotiations. Although Luxembourg described the talks as positive, it is expected to request further discussion at a summit of EU leaders on 20-21 March, with a view to better co-ordinating the proposal with other initiatives being developed at the global level by the Organisation for Economic Co-operation and Development.

Austria’s ambassador told colleagues from other member states that the Austrian government was still reflecting on how to respond to the Commission’s letter.

Eyes on Italy

Questions over Italy’s poor economic performance will loom large over Pier Carlo Padoan, Italy’s new finance minister, at today's meeting, which will be his first in a ministerial capacity.

The European Commission yesterday announced that it would increase its surveillance of Italy’s economy, given the country’s failure to address its high levels of public debt and lack of competitiveness. The eurozone’s third-largest economy could eventually be fined if it refuses to undertake structural reforms in response to the Commission’s concerns.

Olli Rehn, the European commissioner for economic and monetary affairs and the euro, said that addressing Italy’s low competitiveness and record-high public debt would be a “formidable challenge”. He will decide in June whether to recommend that member states place Italy, as well as Croatia and Slovenia, in the excessive-imbalance procedure after analysing responses from the countries indicating how they plan to address the Commission’s concerns.

Fiscal targets

Although the Commission stopped short of placing France in the excessive-debt procedure, it found that imbalances in the eurozone’s second-largest economy remained large because of low exports and high labour costs. France is at risk of missing its own fiscal targets over the coming years, Rehn warned. Pierre Moscovici, France’s finance minister, countered that the Commission’s conclusions were premature.

The Commission also said it would continue to monitor Germany’s weak domestic demand and called on the government to boost consumption in the interests of the country and of the eurozone.

Eurozone finance ministers meeting on Monday (10 March) reviewed progress made by Greece in implementing the terms of its €240 billion bail-out. Although Greece is expected to post its first annual growth in 2014 since 2007, the country is likely to need a third bail-out before the end of the year. Bruegel, a Brussels-based think-tank, estimates this at €40bn.